i. Cybersquatters
This is the situation where the registrant has no legitimate interest in the domain name and has registered it to make money by diverting internet traffic attracted by your name and/or by forcing you to buy the name at an inflated price to protect your brand. The first step is often a “cease and desist” letter but inured cybersquatters will often ignore these, especially if they are not in the UK. Whilst there are legal processes to deal with such registrants, they are time consuming, uncertain and, generally, expensive so in some cases it may make sense to eat one’s principles and seek a deal with the devil.

ii. Competitors
Competitors often seek to gain a competitive advantage by registering a domain name that precisely reflects your corporate or brand name or is a variant thereof. If a “cease and desist” does not work, the options include proceedings either via the domain name dispute protocols or through the courts. In the case of the courts, the action would usually be framed as “passing off”. These cases can be very complicated especially if your brand name sounds generic. In all such proceedings, a registered trademark can be extremely helpful to support your claim.

iii. Pre-existing Registrations
These can be the most frustrating situations as the registrant often registered the name speculatively and makes no use of it. You have a particular problem if the registration pre-dates the start of your business or at least is likely to have been made without knowledge of the existence of your business. Even in this situation, if the registrant at some subsequent stage makes use of the domain name to trade off your goodwill you may well have a good legal case to make, especially if the domain name is a .co.uk rather than a .com.

Pre-emptive Registrations
Whilst it is not possible to register every domain name variant, many problems can be avoided if you register the key variants at the outset. These will often be the .com, .net, .co.uk and those with suffixes reflecting the major territories in which you are or plan to be active. Approriate trademark registrations can be an invaluable reinforcement to your domain name registrations, enhancing your chances of procuring transfer of domain names from third parties and, at the same time, enhancing the value of your business.

For more information please contact Simon Halberstam at shalberstam@kingsleynapley.co.uk.

Certain aspects of the issue have been considered most recently in England and Wales by the High Court in Interflora Inc v. Marks & Spencer Plc [2009] EWHC 1094 (Ch) which concerned the purchase by Marks & Spencer of Google AdWords including not only the term ‘Interflora’, but also a number of combinations of ‘Interflora’ with a descriptive term (such as ‘flowers’, ‘delivery’ or ‘online’) some misspellings and variants (including ‘Inter flora’ and ‘Intaflora’), and Interflora’s domain names (www.interflora.co.uk and www.interflora.com). Therefore, when the search term ‘Interflora’ (or any of the variants purchased by M&S) is entered into Google, ‘M&S Flowers Online’ appeared as a sponsored link:

 
 
The European Court of Justice has since issued the preliminary opinion of Advocate General Poiares Maduro in the joined cases of Google France v. Louis Vuitton Malletier, Google France v. Vaiticum Luteciel and Google France v. CNRRH (joined cases C-236/08, C-237/08 and C-238/08)(28 September 2009)(the ‘Google France cases’). Advocate General Maduro concluded that Google did not infringe trade mark rights when selling AdWords or when sponsored links appeared alongside organic links following a Google search. He also concluded that Google cannot be regarded as providing an information society service within the meaning of Article 14 of the Directive on electronic commerce (Directive 2000/21/EC) since if AdWords displays results based on the commercial relationship with advertisers then it is not a neutral information vehicle which would fall within the definition of hosting under Article 14. The distinction between sponsored links and organic links was that, for natural search results, Google did not have any pecuniary interest in bringing any specific site to the searcher’s attention.

However, the Attorney-General’s opinion that Google’s selling of AdWords to potential competitors did not infringe trade mark rights is not fatal to Interflora’s case since it has a number of important distinctions. First, Google has a different policy in the UK from that which it operates in the rest of Europe. It used to be the case that a trade mark owner could notify Google that it had registered a particular word as a trade mark. Google would then block that word from being purchased as an AdWord without the permission of its owner. However, since 5 May 2008, Google’s policy for the United Kingdom and Ireland, but not for other EC member states, ceased blocking keywords registered as trade marks. The effect of this is that, within the UK and Ireland, parties may bid for AdWords registered as trade marks unfettered, including for use in relation to goods or services for which such trade marks are registered. Interflora expressly questions whether a search engine provider should not allow trade mark owners to block competitors bidding on their brands. In the High Court, Arnold J commented that:

A cynic might suggest that the explanation for this [Google’s policy] was a calculation…that the courts in the United Kingdom and Ireland interpret trade mark law more restrictively (that is to say, less in favour of trade mark owners) than courts in other member states.

Second, unlike the Google France cases, the Interflora action is brought against M&S, its competitor, and not the search engine. The Google France opinion does not deal with competitor bidding, but instead focuses on customer confusion which is not at issue in Interflora. Finally, the Advocate General’s opinion is precisely that: it is not guaranteed that the ECJ will follow it and it has no binding legal authority on the UK courts. It is for the UK courts to decide whether Interflora’s rights have been infringed.

The immunities in Articles 12 to 15 of the e-commerce Directive concern the exemptions from liability of intermediary service providers in relation to caching, hosting and acting as a ‘mere conduit’ of information. Yet, the provisions of the Directive were drafted with the content delivery model of the late 1990s in mind: the creation of software and content which was hosted, updated and distributed. This does not sit easily with the so-called Web 2.0 intermediaries who exploit both client- and server-side software with content syndication to deliver information storage, creation, and dissemination capabilities to users. Web 2.0 technologies are shifting the Internet from a traditional goods and services marketplace to a user-centred and user-driven environment. The new class of intermediary includes sites such as eBay, Facebook, Wikipedia and YouTube as well as search engines. This is mirrored by a shift from an online advertising model whereby companies deliver content based on a CPI (cost per impression) model or targeted online advertising on sites enjoying high traffic to companies who provide targeted online advertising based upon specific user data, such as browsing history or contextual relevance between a particular brand and the recipient website.

There is, then, a current absence of legal clarity in cases concerning the display of targeted advertising which might, on the face of it, infringe the rights of competitive brand owners. As a result of this legal uncertainty, the serving of advertisements which are based on behavioural marketing and which deliberately aim to exclude (or certainly to marginalise) the owners of competitive brands would seem set to continue, at least until the ECJ considers the queue of related cases coming before it (Portakabin Limited and Portakabin BV v. Primakabin BV; Die BergSpechte Outdoor Reisen und Alpinschule Edi Koblmuller GmbH v. Gunter Guni and trekking.at Reisen ; Bananabay) and manages to provide a level of certainty and harmonisation across the EU which is currently lacking. It may also finally review the system of immunities within the e-Commerce Directive in the light of the technological advances and consumer behaviour patterns of the past ten years.

Dr Stefan Fafinski, IT expert of Invenio Research Limited (invenio-research.co.uk) and Simon Halberstam, Solicitor (weblaw.co.uk). Contact Simon Halberstam

This statutory instrument, which came into force on 31 October 2000, is designed to protect consumers from abuses particular to distance selling.

With certain exceptions it applies to any contract between a business and a consumer which is not made face to face. Although the European Directive on which the Regulations are based was originally formulated with mail order and telesales in mind, the Regulations are likely to have most impact on B2C (business to consumer) e-commerce.

Information requirements 

You need to provide certain information to consumers before they enter into a contract with you including:

• your name and, if the consumer pays in advance, your address,
•  a description of the goods or services and the price,
• delivery costs and arrangements for delivery,
•  how long the offer or the price will remain valid,
• the existence of a right to cancel and who will be responsible for returning the goods, and
•  if appropriate, the length of time that the contract will remain in force (for example, if services are being provided over a period of time).

 Certain information (including all the above) must also be confirmed in writing in ‘durable form’ and there is some question as to whether this includes fax and email – the DTI certainly seem to think so. In addition to the above the written confirmation must also state details of any after sales service or guarantee and how a contract with no particular end date (such as telephone, gas or electricity supply contract) may be terminated by the consumer. These details can appear in a catalogue or an advertisement but more usually would appear in the standard terms and conditions provided before the contract is concluded. Updating your existing standard terms will be vital to ensure compliance with this provision.

If a consumer is telephoned at home by a business the caller will have to identify who it represents and the commercial purpose of the call at the beginning of the conversation.

Consumers’ cancellation rights 

Consumers also have a ‘cooling-off period’ of seven working days in which they can cancel the contract without penalty. The period commences on the date of receipt of the goods or, in the case of services, the day on which the consumer agreed to proceed with the contract. However, if at that point the information requirements (see above) have not been complied with, the period of seven working days commences when the information has been provided to the consumer or at the expiry of three months from delivery whichever is earlier.

If the consumer exercises the right to cancel it must make the goods available for collection (they are under no obligation to return them) and a full refund must be provided within 30 days of cancellation. It seems that the obligation to make goods available and the right to a refund cannot be linked. Therefore, if a customer has failed to allow a business to collect items, the business may still be required to provide the refund. The customer is obliged to look after the goods between cancellation and collection.

The only charge the business can make is a sum equivalent to the direct costs of recovery of the goods provided a term in the contract requires the consumer to return the items and he or she has failed to do so. An update to your terms and conditions could prove useful in this area.

If the contract is cancelled, any related credit agreement will be automatically cancelled at the same time.

There are certain contracts which cannot be cancelled such as contracts for the sale of software, CD-ROMs and videos once unsealed by the consumer and newspapers, periodicals and magazines (although, interestingly, not for books which would seem to leave the cancellation rights open to abuse against booksellers). Also the sale of perishables such as flowers is exempted as are items which cannot be returned such as electricity and items which are made to the customer’s specification.

Payment cards 

Where a consumer’s payment card is used fraudulently in connection with a contract concluded other than face to face the consumer is entitled to cancel the payment. If the payment has been made, the consumer is entitled to a refund. This removes the existing potential liability of the consumer for the first £50 of loss caused by fraudulent use of a payment card which exists under the Consumer Credit Act 1974. This now only applies to face to face contracts.

Performance of contract 

Unless agreed otherwise the contract must be performed (e.g. goods delivered) within 30 days and, if this is impossible, the consumer is entitled to be informed and to receive a refund. Any related credit agreement will then be cancelled. The business may be able to substitute other goods and services of equivalent quality and price for those which are unavailable if the contract with the consumer so provides.

Again scrutiny of your standard terms should be undertaken in view of the ability to mitigate the effect of this provision.

Inertia Selling 

Where unsolicited goods are sent or services are provided to a consumer and the goods or services are not provided in respect of the consumer’s business, that person may use or deal with them as though they were a gift. The rights of the sender are extinguished and it is an offence to demand payment for the goods or services. This pretty much restates existing law save that an offence of demanding payment for unsolicited services is created.

Exemptions 

Not all contracts fall within the ambit of the Regulations. These ‘excepted contracts’ include contracts concerning the sale and purchase of land, auctions, financial services, vending machines and pay-phones. Other types of contracts are exempted from certain regulations, for example contracts for the supply of food, drink, accommodation, transport and leisure services.

Enforcement 

Fortunately, the original proposal that breach of certain of the Regulations would constitute a criminal offence has now been dropped. However, particularly in the case of the compliance with the information requirements, businesses will ideally want the ‘cooling-off period’ to begin and end as quickly as possible and it is important to ensure that these requirements are complied with. The Director General of Fair Trading has the task of investigating complaints and enforcing the provisions of the Regulations – through use of injunctions, if necessary.

What businesses should do next 

The terms and conditions applicable to consumer contracts must be considered to ensure that they comply with the information requirements. If they do not, all distance contracts you enter into will be capable of cancellation for a period of three months from delivery of the goods or performance of the services.

Consumers cannot be asked to contract out of their rights under these regulations save where specifically provided. The effect of the Regulations can be mitigated in certain respects (as indicated above) by an update to your terms and conditions.

The full text of the regulations can be found at the HMSO website and advice is also provided on the DTI’s website.

For further information, please  contact Simon Halberstam

 Title: Consumer protection (Distance selling) Regulations 2000

In force: 31 October 2000

Application: with certain exceptions the Regulations apply to any contract between a business and a consumer which is not made face to face (mail order, e-commerce, telesales).

Key Provisions:

• certain information must be provided to consumers before entering into a contract such as your name, address, price, delivery details etc;
•  this information must also be confirmed in durable form – writing, email (possibly) and fax; 
• consumers have a right to cancel a contract during a 7 working day cooling off period and, upon cancellation, a full refund must be given;
•  contracts must be performed within 30 days (e.g. goods delivered) unless certain exceptions apply.
•   You should consider your terms of business with consumers to ensure compliance with the Regulations.

Richard Saville-Smith paid £70 for the name www.narnia.mobi so his son Comrie, 10, who is a CS Lewis fan, could use it for his e-mail address.

To view full news story on  family in battle over web address  BBC Scotland (june 2008)

Before we consider the particularities of the online world, we must take a step back and examine contractual formation in the offline world which is the background against which the relevant rules which have now been applied to the online world were established.

The Offline World

In the traditional world, it has long been clear when a contract has been concluded. It is when both parties put their pens to the signature section of a physical document which sets out the agreed terms. It is true that a contract may be concluded orally but if either party subsequently denies the existence of the contract, there are often enormous evidential problems in establishing that the agreement actually did come into place.

Before we consider the impact of the Internet on the contractual process, we need to consider the legal components which enable a contract to come into existence.

The 4 Contractual Components

There are four such elements. These are consideration, the intention to create legal relations, offer and acceptance,. The concept of consideration really means that each party should derive something beneficial from the transaction, hence if I offer to give you my car as a gift, I derive no consideration. The second element, namely the intention to create legal relations may be passed over swiftly as this is usually understood to exist by virtue of the fact that the parties are in negotiations. This leaves us with the essence of the conract; offer and acceptance.

Offer or Invitation to Treat?

By way of example, an offer is made when one party proposes to another that it should buy a particular item on particular terms, including the precise nature of the item, the price to be paid, the mode of delivery and the date of payment. An offer must not be confused with an invitation to treat. The latter is an intimation by one party to another that it may be willing to do business in relation to a particular article on particular terms and that the other party, if interested should make the first party an offer in relation thereto. This can be a very subtle distinction but is, from the contractual perspective, a crucial one. For example, perverse as it may sound, if you go to the check-out in a supermarket with a basket full of items of food and drink, the person at the check-out, if he/she were very well informed about the nuances of the law, would be fully entitled to turn you away and inform you that the supermarket does not wish to accept your offer for those items. Indeed, the items that you see with price labels on the supermarket shelves are deemed by the law to constitute invitations to treat not offers and therefore not capable of acceptance by the customer. In summary, you cannot accept an invitation to treat and thereby conclude a contract.

Acceptance – when does it occur and what are the effects?

This brings us on to the final element, acceptance. Let us assume that there is a proper offer on the table. For example, A offers B to sell him his car for £10,000 p.a. plus delivery costs of £250. Let us also assume that this offer is acceptable to B. The question then arises of how B can accept this offer. Again in the traditional environment, this would usually be achieved by both parties signing a document containing those and other relevant terms or, possibly by an exchange of correspondence. The moment of acceptance would generally determine not only the time the contract was entered into but also, if nothing contrary were stated in the terms of the contract, the nationality of the laws that would apply to the contract and the jurisdiction that would be the appropriate forum in which any disputes would be adjudicated. This can become very important if the 2 parties are in different countries with different legal systems. Most contracts avoid the risk by expressly stating the choice of law and jurisdiction. Readers should note the difference between an acceptance and a counter-offer. For example, if in response to A’s offer above, B were to write back and say, “yes I accept your offer to sell me the car for £10,000 including delivery, that would not constitute acceptance as the terms are not identical and therefore at this point no contract would enter existence.

On-line Acceptance

With the advent of the online world, the law of contract has not altered; rather it has had to apply the existing concepts to a new medium. There are two mainstream ways of concluding a contract online.

By Email

The first is by way of exchange of emails. This is similar to the exchange of physical correspondence. As long as the email of acceptance does not vary the terms set out in the email of offer, a contract will be concluded by the second email. However, questions can arise as to when the acceptance is valid. This is especially so when there is a limited supply. For example, what happens if a computer company has a total of 5 PCs to sell and sends out emails to all of its clients on 2nd January notifying them of the PCs and their price. If 6 of the company’s customers send emails of acceptance on 3rd January, which customer loses out? In the offline world to cover the equivalent situation, the first letter to be posted is the one which is deemed to be the successful acceptance even if it happens to arrive on the desk of the offeror after the other letter has already arrived. In the online world, it has not yet been unequivocally determined as to what constitutes the equivalent of posting in a letter box – is it the moment of transmission of the email, the moment it arrives in the addressee’s inbox or the moment that the addressee opens that email. The particular circumstances will usually dictate the answer. To avoid doubt, the company should specify in its terms and conditions how, in the event of competing emails of acceptance, it will determine which email has been deemed to arrive first.

By a Website

The other method of concluding an online contract is via a website when you go onto a website, select certain items and proceed to the checkout. The issue discussed above as to whether the display of certain items on a website constitutes an offer of invitation to treat or offer is also relevant to the website environment as Argos and other retailers who have made mistakes in the prices advertised on their website have discovered. In order for a company to run a proper e-commerce operation, it needs to ensure that its terms and conditions are property adapted to the online environment, that potential clients have sight of the terms and conditions which will govern the contract before conclusion of the contract and that it constructs its site in such a way as clearly to indicate whether the site is an offer capable of acceptance or an invitation to treat which is not. The acceptance will generally be by way of a click on the word “accept”. “Clickwrap” acceptance has now been granted similar status to the offline signature although, understandably, evidentially, the former is still preferable.

The SLA must also set out the maximum credit available in respect of any period and that the service credits cannot give rise to a refund or credit against fees due under any other agreement in place between the parties.

Summary

To conclude a valid online contract on the legal basis that you wish, you must ensure that the terms and conditions:

• are clearly displayed on the website or integrated into the exchange of emails;
• have been adapted properly to the online environment – certain changes are necessary to reflect legislation which only applies to online transactions;
• clearly set out whether the site constitutes an offer or invitation to treat;
• what will constitute valid acceptance.

© This article is copyright Simon Halberstam 2008 and should not be construed as legal advice or opinion in any specific facts or circumstances. the contents are intended for generic information purposes only. You are urged to contact a suitably qualified lawyer for specific advice.

“Most businesses shelling out their hard-earned marketing budget on a pay per click (PPC) campaign want to know that they can rely on the statistics they are provided with. After all most newspaper and magazine circulations are independently audited. However you may only have someone elses word to take for it on a PPC campaign.

An advertisers claim that ‘we regularly get 10,000 hits per week’ for example could amount to negligent or fraudulent misrepresentation, and in any case may well not tell the whole story. But how will you ever know?

If possible, such claims should be independently audited. If not then before investing your money you will need a clear understanding of how the statistics are collated and what they actually mean. The more money you are investing, the more care and attention you should take over the wording of the contract that you enter into and you should consider implementing a contractual mechanism for resolving any disputes effectively.

In the same way that dodgy pop-bands may tour the Record Shops buying their own single in order to boost their chart rating, the number of clicks may be fraudulently boosted to your cost. You may therefore want to be able to check whether repeated clicks have come from the same place to see if this is happening.

We all know the phrase ‘Lies, damn lies and statistics’. Even when the campaign provider is entirely honest, you may still walk away dissatisfied by the campaign, without necessarily any legal recourse. It’s worth taking up references from other clients who have used the same PPC campaign provider, and see how happy they were with it and how it worked for them.”

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© This article is copyright Simon Halberstam  2008 and should not be construed as legal advice or opinion in any specific facts or circumstances. the contents are intended for generic information purposes only. You are urged to contact a suitably qualified lawyer for specific advice.

Email Data Security:

If your job is to maintain the security and integrity of your organisation’s network, a detailed knowledge of the Data Protection Act and related legislation is a boring but necessary part of the job for many of my clients.

Legislation can really only recommend the basic principles and the world of IT will inevitably develop more quickly than the legislation underpinning it. The challenge for network security specialists developing new systems and solutions is to work within the letter and spirit of the legislative framework.

For most businesses regulatory compliance is inextricably linked to the commercial need to maintain secure networks. For example, if a credit card company failed to maintain network security, it would expose itself to the major fraud and legal claims which could cost millions of pounds.

Storage of Data and Liability:

The importance of backing up data must have been brought home to many of us by the experiences of businesses large and small in New Orleans, many of which no doubt will have suffered a devastating loss of data following Hurricane Katrina.

If anyone has any doubt about the importance of backing up data, it’s worth bearing in mind the following points from a legal perspective:

As a general rule legal actions may be brought within six years of the act or omission complained of. Liability can attract not only to the company itself but to the directors or even in some cases the main share holders.

Under the DPA, ‘personal data shall be adequate, relevant and not excessive in relation to the purpose or purposes of which they are processed’. There’s also an obligation to keep the personal data up to date. In other-words you should have a rigorous system in place to ensure for example that your ancient data files only contain relevant, adequate and up to date personal information.

The DPA states that “appropriate technical and organizational measures shall be taken” to safeguard personal data. This is something that many businesses abjectly fail to do. As a result, credit card numbers, membership lists and other personal data have occasionally become publicly accessible on the web. From a commercial point of view, lose that data, and you may not have a business at all.

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© This article is copyright Simon Halberstam 2008 and should not be construed as legal advice or opinion in any specific facts or circumstances. the contents are intended for generic information purposes only. You are urged to contact a suitably qualified lawyer for specific advice.